Struggling retailer American Apparel Inc said it received a notice of default from Lion Capital, one of its lenders, following its failure to repay a $10 million loan.

Lion Capital had asked American Apparel last month to repay the loan four years early after the retailer ousted its founder and CEO Dov Charney on June 18.

American Apparel on Tuesday rejected the claim and said Lion Capital cannot demand accelerated repayment before July 19, the day when Charney's role as CEO and chairman effectively ends.

The company said its revolving credit facility does not currently permit repaying loans under the agreement with Lion Capital.